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Preparing a Cash Flow Summary

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Prepare the cash flow summary for a project given the following information:

Service life 8 years
Recovery period 5 years
Depreciation method Accelerated
Purchase price $9700
Installation and shipping cost $ 300
Change in net working capital $ 500
Annual revenue $6000
Annual expense (years 1-5) $2000
Annual expense (years 6-8) $4000
Estimated salvage value $1000
Tax rate 30%

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Solution Summary

This solution shows how to convert accrual-basis accounting measures into cash flow information.

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